CNIC
NAF BENEFITS
Retirement Guide
Information on your:
Retirement Plan
Post Retirement Medical
Post Retirement Life Insurance
Retirement Guide
Table of Contents
Title
Page
Introduction ....................................................................................................................................3
Eligible Plan Participants ..............................................................................................................4
Service .............................................................................................................................................5
Enrollment ......................................................................................................................................6
Cost ..................................................................................................................................................6
Retirement Plan Eligibility............................................................................................................7
How Retirement Plan Benefits are Calculated ............................................................................7
How Your Retirement Plan Benefit is Paid ...............................................................................11
In Service Death Benefit ..............................................................................................................12
If You Become Disabled ..............................................................................................................13
If You Leave CNIC ......................................................................................................................13
How and When to Apply For Your Benefit ...............................................................................14
Other Post Retirement Coverage………………………………………………………...……15
2
Rev. 2.1.2012
Your Retirement Plan
INTRODUCTION
The CNIC NAF Retirement Plan (the Retirement Plan) is a
voluntary, contributory defined benefit plan designed to
provide you with a source of income when your career with
CNIC ends. Together with the income you receive from
Social Security benefits, your 401k Savings Plan, and any
personal savings, your Retirement Plan benefit can help you
enjoy the rewards of a well-earned retirement.
This booklet describes the general benefit provisions. The
amount of your monthly annuity under the Retirement Plan is
based on your highest consecutive three-year average earnings
and years of Credited Service at the time of retirement.
In your first three to five years of retirement, your monthly
annuity payments will total more than you paid into the
Retirement Plan while you were working as a NAF CNIC
employee. Your monthly annuity payments will continue for
the rest of your life.
If you have any questions after reading this booklet, please
contact your local benefit representative.
_________________________________________________
This booklet was prepared as an aid to assist employees in understanding the
Retirement Plan. If there are any differences in this and the actual Retirement Plan
document, the actual Retirement Plan document will prevail.
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Rev. 2.1.2012
ELIGIBLE PLAN
PARTICIPANTS
You are eligible to participate in the Retirement Plan if you:
•
are a civilian regular full time or regular part time CNIC
NAF employee working in the United States (whether a
U.S. Citizen or a Non-U.S. Citizen)
or
• are an employee of the United States Naval Academy
(“USNA”) as of August 1, 2011, who has participated in
the Norfolk Naval Shipyard Co-Operative Association
Pension Plan (“NNS Plan”) and who have not previously
been a CNIC employee
or
• are a civilian U.S. citizen working overseas in one of the
above employment groups.
Non-U.S. Citizens overseas are not eligible to enroll in the
retirement plan.
If you were hired on or after July 15, 2011, there is no waiting
period and you are eligible to immediately begin participating
in the Retirement Plan. Eligible employees may elect to join
the Retirement Plan at any time on or after their date of hire.
Participants must elect to begin contributing to the Retirement
Plan within 30 days of making the election to join the Plan.
Credited service will begin as of the first day of the payroll
period (or the employee’s date of hire, if later) to which
employee contributions begin.
If you were hired after January 1, 1989, but before July 15,
2011, you are eligible to participate in the Retirement Plan
after you have been employed in an eligible position for one
continuous year. You may elect to enroll in the Retirement
Plan either on your date of hire or any date during your first
year of Continuous Service.
However, deductions for
employee contributions will only begin after the completion of
the one year waiting period. You will receive retroactive
credited service for the one-year waiting period at no cost as
long as you enroll in the Retirement Plan within 30 days of
completion of your first year of continuous employment.
Eligible employees hired before January 1, 1989 had no
waiting period and you were eligible to immediately begin
participating in the Retirement Plan. Eligible employees could
elect to join the Retirement Plan at any time on or after their
date of hire.
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Rev. 2.1.2012
SERVICE
For Retirement Plan purposes, the following definitions apply.
•
Continuous / Vesting Service - used to determine your
eligibility to receive a benefit.
•
Credited Service - used to calculate your pension
benefit.
Full vesting - 5 years of Continuous / Vesting Service.
Continuous / Vesting Service
Continuous / Vesting Service is important in determining your
eligibility to receive a benefit. You earn Continuous / Vesting
Service for all your years and months of continuous
employment as an eligible employee.
Credited Service
Credited Service includes all the years and months of NAF
employment for which you make contributions to the
Retirement Plan, plus:
•
Unused sick leave (if you retire with an immediate
annuity).
•
Uniform service can be bought back if you served
immediately prior to reemployment at CNIC and
participate in the Retirement Plan within 12 months of
notification, assuming you pay for the Credited Service
within 5 years from hire (or rehire) date and meet the
requirements of the Uniformed Services Employment
and Reemployment Rights Act (USERRA).
Should you leave NAF employment and withdraw your
Retirement Plan contributions, you will lose the Credited
Service for that period of time. If you return to active CNIC
employment as a regular employee, you are eligible to buy
back your Credited Service. In order to buy back this Credited
Service you must notify your benefits representative within 30
days after you return to work in order to enroll when you are
first eligible, and repay the contributions you withdrew (plus
interest) within 12 months after your return to work date. You
must buy back the entire Credited Service period. You cannot
buy back only a part of it.
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Rev. 2.1.2012
ENROLLMENT
To enroll in the Plan, you must complete the Application for
Participation (RP-2), agreeing to have one percent (1%) of
your salary deducted for the Retirement Plan each pay period.
You will also be required to name a beneficiary (the person or
persons you designate to receive death benefits from the
Retirement Plan).
If you are hired on or after July 15, 2011, your plan
membership begins upon election to join the plan and the start
of your employee contributions.
If you are hired before July 15, 2011, your plan membership
and deductions will start on the first day of the pay period after
you return your enrollment card, one year after your eligible
hire date.
COST
CNIC pays a majority of the cost of the Retirement Plan.
Your employee contributions will equal one percent (1%) of
your gross salary. Contributions will be withheld from your
paycheck each pay period.
You will never lose the money you contribute to the
Retirement Plan. In the event you leave employment, you
may request that your contributions be returned with interest.
Should you leave with 5 or more years of Continuous /
Vesting Service (fully vested), you may withdraw your
contributions with interest or leave them in the Retirement
Plan to draw an annuity at age 52 or any time thereafter. When
you leave CNIC NAF employment, contact your benefits
representative to obtain Notice of Termination of Employment
form (RP-6) to make your election.
You can elect to stop participating in the Retirement Plan at
any time. Your enrollment will be cancelled and your
contributions stopped. To do this, complete the Election to
Discontinue Active Participation form (RP-5). You will not
be allowed to resume contributing for one year.
_________________________________________________
IMPORTANT NOTE: If you choose to stop participating in
the Retirement Plan, your Credited Service from that point in
time until you again participate will NOT be included in the
calculation of your Retirement Plan benefit when you later
retire!
_________________________________________________
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Rev. 2.1.2012
RETIREMENT
PLAN
ELIGIBILITY
Normal Retirement or Unreduced Early Retirement: You
may retire with an unreduced annuity when you meet the
requirements of the following chart:
Age
62 or older
60
55
Years of Continuous / Vesting
Service
5
20
30
Early Retirement (reduced): You may retire early any time
after you reach age 52 and complete 5 years of Service. You
are eligible to receive reduced benefits between age 52 and 62,
reduced by one-third of one percent (.333%) for each month
(4% per year) prior to age 62.
Special Early Retirement (reduced): You may also be
eligible for special early retirement. You must have 25 years
of Service at any age or age 50 with 20 years of Service when
you are involuntarily terminated or retire because of a
reduction in force (RIF) or business-based action (BBA).
Special early retirement benefits are reduced by one-sixth of
one percent (.167%) for each month (2% per year) prior to age
55.
HOW RETIREMENT
PLAN BENEFITS
ARE CALCULATED
The amount of your benefit will be figured using a
mathematical formula based on the following data:
•
Years and months of Credited Service
and
•
Highest three consecutive years average earnings
and
•
Estimated Social Security benefit.
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Rev. 2.1.2012
The formula(s) used to calculate the Retirement Plan benefits
for NAF employees is as follows:
BASIC FORMULA: (A. plus B. plus C.) minus D.
A. 1.5% times the highest three year average earnings
times Credited Service for the first five (5) years of
Credited Service
Plus
B. 1.75% times the highest three year average earnings
times Credited Service for the next five (5) years of
Credited Service
Plus
C. 2.0% times the highest three year average earnings
times Credited Service for all years of Credited Service
thereafter
Minus
D. 2.5% times Estimated Social Security benefit times
Credited Service (Maximum 50%)
PRIOR SERVICE FORMULA
(For Credited Service prior to September 1, 1974):
First ten (10) years of Credited Service:
(A. Plus B.) Times C.
A. 1% times the highest three consecutive average
earnings up to $3,600
Plus
B. 1.5% times the highest three consecutive average
earnings in excess of $3,600
Times
C. Credited Service for each of the first 10 years
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Rev. 2.1.2012
Credited Service in excess of ten (10) years:
(A. Plus B.) Times C.
A. 1.25% of the first $3,600 of your high three average
earnings
Plus
B. 2% of your high three average earnings in excess of
$3,600
Times
C. Credited Service for all years of Credited Service
thereafter
MINIMUM Formula
The Retirement Plan benefit will never be less than the
benefit calculated below:
A. Times B.
A. .5% times the highest three year average earnings
Times
B. All years of Credited Service
The Retirement Plan benefits calculated under this formula
will be paid in the form of a monthly annuity for your lifetime
or in certain circumstances, in a lump sum.
Credited Service
Your Retirement Plan benefit depends on your Credited
Service under the Retirement Plan. See the Section on Service
on page 5 for more information on the time that will be
included in your Credited Service.
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Rev. 2.1.2012
Highest Three Years of Consecutive Earnings
Your benefit also depends on the average earnings of your
highest three years of consecutive earnings. Earnings include
your base salary, overtime and shift differential. Relocation
expenses, reimbursements, tuition refunds and other special
forms of compensation are not included.
Social Security Offset
Your Retirement Plan benefit will be paid in full, without the
Social Security Offset until your age 62. At age 62, the Social
Security offset will be applied.
_________________________________________________
IMPORTANT NOTE: Your Social Security benefit paid by
the Social Security Administration is NOT actually impacted!
Only an estimate of what you will be paid by Social Security
(up to a maximum of 50%) is used in the Retirement Plan
formula.
_________________________________________________
Cost of Living Adjustments (COLAs)
A major advantage of your Retirement Plan is that your
benefit does not stop growing when you retire. Once your
benefit starts, the amount of your monthly annuity may
increase annually based on inflation. If cost of living (under
the provisions of the Civil Service Retirement Act) does
increase, then you will receive an annual COLA increase.
Your benefit will not be reduced if the cost of living decreases.
Prior Plan Benefit
For USNA and NNS NAF employees with a prior NNS Plan
benefit, the pre-merger benefit formula will still be calculated
under the terms of the NNS Plan through July 31, 2011
combined with the post July 31, 2011 accrued benefit under
the terms of this Retirement Plan.
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Rev. 2.1.2012
HOW YOUR
RETIREMENT
PLAN BENEFIT
IS PAID
Your Retirement Plan benefit is usually paid as a monthly
annuity for life. Depending on your payment option election,
you may elect a monthly benefit that continues to a spouse
or beneficiary after you die. The options described below
allow you to arrange your Retirement Plan benefit in a way
that best suits your personal needs.
Regardless of which payment option you choose, your
beneficiary will receive the remaining value of your employee
contributions including interest upon your death.
Single Life Annuity
Under this option you will receive your Retirement Plan
benefit for as long as you live. In the event of your death,
there would be no future benefits paid from the Retirement
Plan. Your beneficiary would receive only a refund of any
unpaid employee contributions, if any. The Retirement Plan
has no further benefit obligations for you.
Spouses Annuity
If you are married when you retire, you may elect an annuity
that provides a portion that continues to your spouse upon
your death. This election results in a 10% reduction in your
monthly benefit, but provides your spouse with a reduced
monthly benefit for his or her lifetime after your death.
Upon your normal or early retirement, you would receive 90%
of your Retirement Plan benefit each month. Upon your
death, your spouse will begin to receive a monthly pension
equal to 55% of your Retirement Plan benefit. Payments will
continue for your spouse’s lifetime unless he or she
remarries before age 60.
If your spouse dies before you, but after your Retirement Plan
benefit has begun, your monthly annuity payment will revert
back to 100% and will remain at that level for the remainder of
your lifetime.
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Rev. 2.1.2012
IN SERVICE
DEATH
BENEFIT
If you die while you are still working as a NAF employee,
your beneficiary will be eligible to receive either a preretirement spousal benefit or a refund of your employee
contributions including interest from the Retirement Plan.
Pre-Retirement Spousal Benefit
Your spouse will receive a monthly benefit for his or her
lifetime, starting on the first of the month following your
death, if you are a participant in the Retirement Plan and:
•
Have at least 18 months of Credited Service,
•
Have been married for a year or more, and
•
Named your spouse as the sole beneficiary.
The amount of the pre-retirement spousal benefit will depend
on your age at death.
•
If you die after age 60, the spousal benefit will be 55% of
the Retirement Plan benefit you had earned as of the date
of death.
•
If you die before age 60, the spousal benefit will be 55%
of the greater of a. or b.:
a. the Retirement Plan benefit your had earned as of the
date of death
b. the benefit calculated using the Credited Service you
would have had if you had lived to age 60. This
minimum benefit can be as much as 22% of your
highest three year average earnings.
This benefit will be reduced by any current Social
Security benefit he or she may be entitled to receive.
Employee Contribution Refund
If you are not married when you die, or if your spouse does
not qualify for a pre-retirement spousal benefit, your
beneficiary will receive a lump sum payment equal to the total
of your employee contributions including interest and will
represent a distribution of your full plan benefits. The
Retirement Plan has no further benefit obligations.
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Rev. 2.1.2012
IF YOU
BECOME
DISABLED
Plan Participation
If you cannot work and go on leave without pay due to a
permanent illness or injury, your employee contributions will
end. If you return to work within 12 months, you will not
have a break in service. You will be eligible to buy back the
Credited Service for the time you missed by repaying your
employee contributions. The amount you repay will be based
on your pay when you became disabled.
Should your disability last longer than 12 months, you will
have a break in service. If you return to work, you will be able
to rejoin the Retirement Plan immediately.
You are not able to retire if you are receiving a benefit from
the CNIC Long Term Disability (LTD) Plan. LTD benefits
must stop before you may retire from the Retirement Plan.
IF YOU
LEAVE
CNIC
As mentioned earlier, you may qualify for a Retirement Plan
benefit even if you quit or your employment is terminated.
If you terminate employment after you are vested in a benefit,
you can choose to defer your benefit to normal retirement.
If you elect this deferred benefit and die before your payments
begin, your beneficiary will receive a lump sum benefit equal
to your employee contributions including interest. The
Retirement Plan will not pay a monthly benefit to your
beneficiary. This lump sum payment represents a full
distribution of your plan benefits. The Retirement Plan has no
further benefit obligations for you.
In lieu of a deferred benefit, you can elect to get a refund of
your contributions. This will be paid in a lump sum and will
include interest. If you elect to receive a refund of your
employee contributions, you will not be eligible for a monthly
benefit at a later date. The lump sum payment represents a full
distribution of your plan benefits. The Retirement Plan has no
further benefit obligations for you.
If you terminate employment from CNIC prior to becoming
vested, you will receive a refund of your contributions
including interest. The lump sum payment represents a full
distribution of your plan benefits. The Retirement Plan has no
further benefit obligations for you.
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Rev. 2.1.2012
HOW AND
WHEN TO
APPLY FOR
YOUR
BENEFIT
Please submit your completed retirement application along
with the required supporting documentation at least 60 days
prior to your requested retirement date in order to avoid any
delay in payment.
All applications must be made in writing. Notify your benefits
representative to help you apply for your Retirement Plan
benefit. You will receive a confirmation of your monthly
benefit and all the forms and instructions necessary to make
your transition to retirement as smooth as possible.
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Rev. 2.1.2012
POST RETIREMENT MEDICAL INSURANCE CRITERIA
You will be eligible to continue Medical Plan coverage for
you and your family if:
•
you retire from the Retirement Plan
and
•
you have 15 years of cumulative participation in a DOD
NAF Medical Plan
and
•
you are covered by the NAF Medical Plan at the time you
retire.
Post retirement Medical Plan coverage will be the same as that
provided to active employees and will change if the active
coverage changes. Your post retirement Medical Plan
insurance will continue until you reach age 65 when you
become eligible for Medicare. If you choose to continue your
post retirement Medical Plan coverage past age 65, Medicare
will become your primary and you will be changed to Aetna
Traditional Choice Plan, which will be your secondary
coverage.
POST RETIREMENT LIFE INSURANCE CRITERIA
You will be eligible to continue Life Insurance if you:
•
Have been in the CNIC Life Insurance Plan for 5
consecutive years
and
•
Are age 52 or older when you retire
and
•
Receive a monthly benefit from the Retirement Plan.
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Rev. 2.1.2012
The amount of post retirement life insurance coverage will
depend on when you retire and how long you are in the
Retirement Plan immediately prior to retirement.
•
If you have been in the Retirement Plan for at least 15
years and you retire at age 62 or older, your retiree life
insurance coverage will continue in full until you are age
66. After age 66, it will be reduced 25% a year until it
equals 25% of the original amount.
•
If you have been in the Plan at least 5 years and you
retire at age 52 or later, your retiree life insurance
coverage will equal 25% of the amount you have just
prior to retirement subject to a $5,000 minimum and a
$10,000 maximum.
•
If you defer annuity benefits until a later date, you will
not be eligible for post retirement life insurance
coverage.
Coverage is paid 100% by the retiree. The cost will be
based on the active rates.
•
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Rev. 2.1.2012
The NAF Benefits Retirement Plan is managed by the CNIC Headquarters Human Resources Branch.
For additional information, send an email to [email protected].